The Islamic State group has claimed responsibility for the attack that killed one police officer and injured two.

Masked police stand on top of their vehicle on the Champs Elysees Avenue after a policeman was killed and two others were wounded in a shooting incident in Paris, France, April 20, 2017.

A fresh wave of terror appears to have hit Paris as one police officer was killed and two injured as a gunman opened fire on the French capital's grand Champs-Elysees.

French prosecutors have opened a terrorism investigation and President Francois Hollande said he is convinced the shooting was "terrorist in nature".

The Islamic State group has claimed responsibility for the attack that sent scores of tourists fleeing into side streets.

Christian Hartmann / Reuters Police secure the Champs Elysees Avenue after one policeman was killed and another wounded in a shooting incident in Paris, France.

French officials say the suspect, who was also shot dead in the incident, was previously flagged as an extremist.

He has been identified by papers left in his car but his name has not been released.

The shooting happened ahead of the first round of the French presidential election on Sunday, where national security has been a major theme.

Investigators searched a home early on Friday in an eastern suburb of Paris believed linked to the attack.

Authorities are trying to determine whether "one or more people" might have helped the attacker.

The attacker emerged from a car and used an automatic weapon to shoot at officers outside a Marks & Spencer's department store at the center of the Champs-Elysees, anti-terrorism prosecutor Francois Molins said. Police shot and killed the gunman. One officer was killed and two seriously wounded. A female foreign tourist also was wounded, Molins said. The Islamic State group's claim of responsibility just a few hours after the attack came unusually swiftly for the extremist group, which has been losing territory in Iraq and Syria.

In a statement from its Amaq news agency, the group gave a pseudonym for the shooter, Abu Yusuf al-Beljiki, indicating he was Belgian or had lived in Belgium. Belgian authorities said they had no information about the suspect.

Investigators searched a home early Friday in an eastern suburb of Paris believed linked to the attack. A police document obtained by The Associated Press identifies the address searched in the town of Chelles as the family home of Karim Cheurfi, a 39-year-old with a criminal record.

Police tape surrounded the quiet, middle-class neighbourhood and worried neighbours expressed surprise at the searches. Archive reports by French newspaper Le Parisien say that Cheurfi was convicted of attacking a police officer in 2001.

The attacker had been flagged as an extremist, according to two police officials, speaking on condition of anonymity because they weren't authorized to publicly discuss the investigation.

The gunfire sent scores of tourists fleeing into side streets.

"They were running, running," said 55-year-old Badi Ftaïti, who lives in the area. "Some were crying. There were tens, maybe even hundreds of them."

The assault recalled two recent attacks on soldiers providing security at prominent locations around Paris: one at the Louvre museum in February and one at Orly airport last month.

The French Interior Ministry said the shooting attack "deliberately" targeted police officers guarding the area.

Media reports had varied wildly on the motivation, with some suggesting it could have been an armed robbery gone wrong.

Speaking in Washington during a news conference with Italian Prime Minister Paolo Gentiloni, US President Donald Trump said the shooting in Paris "looks like another terrorist attack" and sent condolences to France.

"Again, it is happening again seems," Trump said. "I just saw it as I was walking in, so that's a terrible thing. It is a very, very terrible thing that's going on in the world today but it looks like another terrorist attack. What can you say? It just never ends. We have to be strong and we have to be vigilant and I have been saying it for a long time."

A witness identified only as Ines told French television station BFM that she heard a shooting, saw a man's body on the ground and the area was quickly evacuated by police.

A Paris resident says the gunfire that erupted on the French capital's famed Champs-Elysees shopping district.

Badi Ftaiti, a Tunisian-born mason who has spent three decades in Paris, said the attack that officials say left one police officer dead and another wounded didn't panic him.

But the 55-year-old says visitors to the French "were running, running....Some were crying. There were tens, maybe even hundreds of them."

Asked whether the attack was evidence that "Paris isn't Paris" anymore, as claimed by Donald Trump, Ftaiti said the US. President is "barking up the wrong tree." He says: "Paris is Paris. It's America that's not America."

Benoit Tessier / Reuters People raise their arms to show their hands as they walk towards police on a side road near the Champs Elysees Avenue after a policeman was killed and two others were wounded in a shooting incident in Paris. Christian Hartmann / Reuters Police secure the Champs Elysee Avenue after one policeman was killed and another wounded in a shooting incident in Paris, France.

Paris police and soldiers sealed off the area around the Champs-Elysees after an attack on police, ordering tourists back into their hotels and blocking people from approaching the scene.

Emergency vehicles blocked the wide avenue that cuts across central Paris between the Arc de Triomphe and the Tuileries Gardens, normally packed with cars and tourists.

Subway stations in the area were closed off on Thursday night while police secure the scene.

Security forces are more widespread in Paris since deadly Islamic extremist attacks in recent years, and France remains under a state of emergency.

A French television station hosting an event with the 11 candidates running for president briefly interrupted its broadcast to report the shootings.

Conservative contender Francois Fillon, who has campaigned against "Islamic totalitarianism," said on France 2 television that he was canceling his planned campaign stops Friday.

Far-right candidate Marine Le Pen, who campaigns against immigration and Islamic fundamentalism, took to Twitter to offer her sympathy for law enforcement officers "once again targeted." She canceled a minor campaign stop, but scheduled another.

Centrist candidate Emmanuel Macron offered his thoughts to the family of the dead officer.